Powell's 'Hawkish Remarks' Shock... Won-Dollar Exchange Rate Surges 22 Won

Jerome Powell, Chairman of the U.S. Federal Reserve (Fed)
[Photo by Yonhap News]

The won-dollar exchange rate rose by more than 20 won due to hawkish (preference for monetary tightening) remarks by Jerome Powell, Chairman of the U.S. Federal Reserve (Fed).

On the 8th, in the Seoul foreign exchange market, the won-dollar exchange rate closed at 1,321.4 won per dollar, up 22.0 won from the previous day's closing price.

This increase is the largest since the 23.4 won rise on the 6th of last month.

Powell's hawkish comments during his appearance at the Senate Banking Committee hearing influenced the rise in the exchange rate.

He said, "Recent economic indicators have come out stronger than expected," adding, "This suggests that the terminal interest rate level is likely to be higher than previously anticipated."

Accordingly, market expectations are strengthening that the Fed will take a 'big step' (a 0.5 percentage point increase in the base interest rate) at the Federal Open Market Committee (FOMC) meeting scheduled for the 21st to 22nd.

The won-dollar exchange rate, which started the day at 1,317.2 won, rose during the session to 1,323.9 won, approaching the yearly high (1,326.6 won), before narrowing its gains to close the trading day.

With growing expectations of a U.S. interest rate hike, a strong dollar is expected to continue. The dollar index, which measures the value of the dollar against the currencies of six major countries, rose to 105.7, marking the highest level of the year.